City living versus life in the suburbs

The high cost of living has caused many Australians to flee the city in favour of the city fringe. But financial considerations are just part of the equation.

It can be a difficult decision working out where to plant your roots. Do you buy a home in a high-density area, close to the CBD, with a public transport network at your doorstep, or do you choose to spread out a little more on your own patch of land further out from the city with greater travel-to-work times?

It’s a question that’s also boggling the minds of our planners and policymakers too as they grapple with where best to direct funding, infrastructure and resources.

It’s no secret that Australia’s major cities are expensive places to live, with the median house price at $1,144, 217 in Sydney; $882,082 in Melbourne and $496,021 in Brisbane, according to the Domain House Price Report for June 2018. Units are at new median price of $737,080 in Sydney, $496,021 in Melbourne and $379,186 in Brisbane.

For those in Melbourne prepared to buy outside of the inner city, the Domain Group’s first-home buyers report named the town of Millgrove – 70 kms east of the CBD – the most affordable place in greater Melbourne to buy a house. Sydney-siders looking for a cheaper home could look to Gosford on the Central Coast, some 75kms from the Sydney CBD, the report found. Living in such areas, however, can make for a difficult and pricey commute to the city where there’s a high concentration of employment.

Cost of living

Choosing a city lifestyle over the ‘burbs can come with some give and take, particularly at the hip pocket. For starters, there are some marked differences in the cost of living. Numbeo.com tracks global cost of living data and allows for comparisons to be made within Australia as well as against other countries. When comparing Sydney to the suburb of Gosford, for example, it’s stated that you would require around $7,471.64 in Sydney to maintain the same standard of life that you can have with just $6,600 living in Gosford.

The cost per square metre of buying an apartment within the Sydney city area ($13,818) was 144.58% more expensive than buying in the Gosford city area ($5,560). Buying outside of the city centres saw the gap shorten to $71.86%, at $5100 per square metre in Gosford compared to $8,764 in Sydney.

Rent prices in Sydney were 64% higher than in Gosford however grocery costs were almost 10% lower, the data showed.

Current trends

Many residents are being drawn to apartment living, townhouses and duplexes, as the housing market has become harder to break into.

The number of apartments constructed each year had tripled since 2009 and, in 2016, apartments accounted for around one-third of residential building approvals, according to the Reserve Bank of Australia (RBA) June 2017 Quarterly Bulletin.

“Apartments are typically much more affordable than houses. The median price of apartments is around 30 per cent lower than that for houses, in part because apartments are typically smaller but also because apartments use land more intensively.”

According to a report from the Reserve Bank of Australia, apartments in major cities have been mostly constructed in inner (and, to a lesser extent, middle) suburbs, which are well connected with employment centres and amenities. In contrast, new house construction has largely been located in fringe or outer suburbs.

It noted that demographic factors and household formation were amongst the influencing factors on where to live, “with larger households more likely to want larger dwellings, such as houses, while smaller households, such as single adults and older ‘downsizers’, may prefer apartments.”

Real Estate Institute of Australia president Malcolm Gunning explains that while some chose to be out in the suburbs for space for growing families, backyards and a quieter lifestyle, trends show that millennials, for example, tend to opt for city units, forgoing car use to have a more convenient, time-conscious lifestyle.

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Smarter Communities has taken all reasonable care to ensure the information in this publication is accurate as at the date of publication. The information provided in this publication is general only and is not legal, financial or personal advice, and may be the opinion of the author. If further information is required, an appropriately qualified professional should be consulted. Strata Title Management accepts no responsibility for the consequences of error or for any loss or damage suffered by readers of any of the information contained.